The monthly cost of owning a home for first-time buyers is now £971 – £42 or four per cent lower than the cost of renting the equivalent property, according to the latest Halifax Owning vs Renting Review.
The analysis, which is based on housing costs for first-time buyers with a mortgage on a three-bed home compared to the average monthly rent of the same property type, found that the £971 owners are now paying, compares to £1,013 for renters, each month.
While still equating to an almost £500 saving per year for owners, the gap is down from its peak in 2016, when owners were saving £1,567 annually.
The UK’s greatest gap between owners and renters, in percentage terms, can be found in Scotland. Those renting in the nation pay an average £918 per month, compared to £727 for home-owners – a saving of 21 per cent for those on the property ladder.
It is a different story in the East of England, the only region or nation in the UK where it is more expensive to own a property than rent the equivalent. Homeowners there now pay £90 more each month, on average, than those renting.
Kim Kinnaird, mortgage director at the Halifax, says: “Our latest analysis shows that becoming a homeowner can bring significant savings for people. Nationally, homeowners are almost £500 better off than renters each year.
“These benefits are felt most keenly in London, where homeowners are saving nearly £3,000 annually compared to those renting similar properties – a significant figure. In fact, the only region where it is cheaper to rent than own is the East of England, where renters are holding onto £90 each month, compared to owners.
“Of course, making the move from renting to home ownership can be difficult for many, as raising a sufficient deposit and then finding the right property can be challenging.
“While a predicted fall in house prices this year will be welcome news for those looking to buy their first home, it doesn’t change the fact that getting on the property ladder remains expensive – a problem that is compounded when rents are high, impacting the ability to save.”
Table 1: UK average monthly homeowning costs and rent payments
Year | Average monthly homeowning cost * | Average monthly rent payment | Monthly savings for owners | Monthly savings for owners | Annual savings for owners |
2012 | £614 | £661 | 7% | £48 | £572 |
2013 | £581 | £692 | 16% | £111 | £1,327 |
2014 | £607 | £720 | 16% | £113 | £1,361 |
2015 | £616 | £744 | 17% | £128 | £1,539 |
2016 | £629 | £759 | 17% | £131 | £1,567 |
2017 | £629 | £754 | 17% | £125 | £1,501 |
2018 | £669 | £759 | 12% | £90 | £1,084 |
2019 | £727 | £747 | 3% | £20 | £238 |
2020 | £744 | £821 | 9% | £77 | £923 |
2021 | £766 | £874 | 12% | £108 | £1,300 |
2022 | £971 | £1,013 | 4% | £42 | £498 |
Sources: Halifax, Birmingham Midshires and ONS. *Mortgage prices based on Halifax 12mth rolling data calculated to January 2023, January 2022 etc
Table 2: UK average monthly home-owning and rent costs by region
Region | Average monthly homeowning cost* | Average monthly rent payment | Monthly savings for owners | Monthly savings for owners | Annual savings for owners |
Scotland | £727 | £918 | 21% | £191 | £2,295 |
South West | £1,029 | £1,237 | 17% | £208 | £2,492 |
North West | £778 | £922 | 16% | £145 | £1,737 |
Wales | £735 | £872 | 16% | £137 | £1,647 |
Greater London | £1,828 | £2,074 | 12% | £246 | £2,950 |
West Midlands | £839 | £951 | 12% | £112 | £1,342 |
Yorkshire & the Humber | £720 | £802 | 10% | £82 | £980 |
South East | £1,345 | £1,474 | 9% | £129 | £1,550 |
East Midlands | £843 | £931 | 9% | £88 | £1,059 |
North East | £628 | £685 | 8% | £57 | £686 |
Northern Ireland | £596 | £620 | 4% | £24 | £288 |
East of England | £1,212 | £1,122 | -8% | -£90 | -£1,078 |
UK | £971 | £1,013 | 4% | £42 | £498 |
Sources: Halifax, Birmingham Midshires and ONS. *Mortgage prices based on Halifax 12mth rolling data calculated to January 2023
Generation Rent activists attack Labour’s welfare reforms